This is Harry Fine's personal blog containing his comments on current Ontario legal issues and the current state, complexities and absurdities of landlord and tenant law in Ontario. Harry is a paralegal with over 15 years practicing landlord and tenant, Small Claims and Human Rights law and is a former member of the Landlord and Tenant Board. The comments in this blog do not constitute legal advice.

Friday, September 23, 2016

The Airbnb Problem is Connected to Our Awful Tenancy Laws

I read a story in the Toronto Star yesterday about the problem of Airbnb cutting into traditional rentals. The problem
isn’t simple and cuts across complex issues starting with our low interest
rates, booming real estate market, and the emergence of the new sharing
economy. But before we start blaming Airbnb for cannibalizing the
traditional rental market, we should look at the elephant in the room that is
causing many investors to go the Airbnb route. The problem is that the
traditional rental model, governed in Ontario by the Residential Tenancies
Act, is broken. Renting your unit short-term as an Airbnb is exempt
from provincial landlord and tenant legislation, as are rentals in hotels,
cottages or bed and breakfasts.

Why would a condo owner choose the more active,
complicated and time-consuming world of multiple short-term rentals to
traditional rentals? Having to show up every weekend to turn over keys,
do cleaning between rentals, exchange emails and arrange payment on a weekly
basis is a lot of work. How does an Airbnb landlord ever go away for a weekend, and what happens in the winter months when the tourists are not descending on Toronto? It's true, you “might” make more money using
Airbnb, but there are a lot of empty nights on the calendar compared with the
traditional rental where you are guaranteed a monthly rental income.

I think the reason many property owners go the Airbnb
route is that successive governments, the Conservatives with their Tenant
Protection Act in 1998 and Liberals since 2007 with the Residential
Tenancies Act have made renting out a basement or a condo a very high-risk
venture. I know the system well, I’m a former adjudicator at the Landlord
and Tenant Board, a paralegal dealing with landlord and tenant issues, and I
teach landlord and tenant law to aspiring paralegals in the college system.

Evictions, either for rent arrears, tenants committing
illegal acts or endangering occupants safety, usually take months, and in many
cases are impossible to achieve based on the evidentiary burden placed on
landlords. The 2009 policy guideline for residential tenancies under the
Ontario Human Rights Code turns landlords into social workers, requiring them
to accommodate behaviour resulting from Code inclusion (usually disability) to
the point of undue hardship. After evictions, the unpaid rent or damage
claims are rarely recovered.

The irony is that at the same time as governments
refuse to address the perverse complexity and unfairness of the Residential
Tenancies Act, they are looking for ways to open up the basement,
second-suite rental market to house low-income tenants. The Liberals are
talking about inclusionary zoning, making noises about changes to the
Residential Tenancies Act, and to their credit, passed the Strong
Communities Through Affordable Housing Act in 2011, attempting to force
municipalities to allow secondary units in their homes. But it hasn’t
worked.

The government can’t have it both ways. They either have to
turn the business of residential rentals back into a business where parties can
freely contract, instead of the current tenant-centred over-regulation,
otherwise small landlords will continue to look at alternatives that are exempt
from the current regulatory scheme.